Delisting After OTC Purchase to Protect Preferred Stock Investors
Hanwha Co., Ltd. will purchase old preferred shares and delist them.
Hanwha Energy, owned by the third-generation brothers of the group including Kim Dong-kwan, Vice Chairman of Hanwha, Kim Dong-won, CEO of Hanwha Life, and Kim Dong-sun, Vice President of Hanwha Galleria, will launch a tender offer for 8% of Hanwha Co., Ltd.'s common stock. This is interpreted as a preparatory step for future succession.
Seung-yeon Kim, Chairman of Hanwha Group, Dong-kwan Kim, Executive Director of Hanwha Q CELLS
On the 5th, Hanwha decided at a board meeting to acquire treasury shares through an over-the-counter purchase from holders of old preferred shares. Unlike common stock or Hanwha 3 Preferred B shares, Hanwha's old preferred shares have a market capitalization of only 17 billion KRW and very low trading volume, making them small preferred shares with high price volatility.
A Hanwha official explained, "This decision aims to prevent damage to small shareholders caused by sharp price fluctuations and to proactively defend against potential harm to preferred shareholders (such as designation as a management stock or forced delisting) due to the recently strengthened delisting criteria for preferred shares by the stock exchange. By purchasing and then delisting the preferred shares, we can preemptively mitigate potential risks and increase dividend capacity, which is expected to have a positive effect on enhancing corporate and shareholder value."
The purchase price is set at 40,500 KRW, a 24.5% premium over the weighted arithmetic average price of the past three months (32,534 KRW). The purchase price was determined through an objective review by external experts, considering the current market price and stock price trends from the perspective of value return to shareholders. Hanwha plans to accept transfer applications from old preferred shareholders from August 16 to September 5 and purchase all preferred shares. After the over-the-counter purchase is completed, the preferred shares will be canceled and delisted.
Additionally, on the 4th, Hanwha Energy decided at its board meeting to conduct a tender offer for 6 million shares of Hanwha Co., Ltd. common stock from existing shareholders. By increasing its stake in Hanwha Co., Ltd., Hanwha Energy will enhance the overall governance stability and transparency of the Hanwha Group and strengthen responsible management as a major shareholder.
Kim Dong-kwan, Vice Chairman, holds 50% of Hanwha Energy's shares, while CEO Kim Dong-won and Vice President Kim Dong-sun each hold 25%.
Hanwha Energy chose a tender offer method targeting all shareholders with an appropriate premium added to the market price to align with the purpose of enhancing shareholder value. The tender offer period is from the 5th to the 24th, and the purchase price was set at 30,000 KRW, a 12.9% premium over the recent one-month average and a 7.7% premium over the previous day's closing price. The purchase amount is 180 billion KRW.
After the purchase, Hanwha Energy's stake in Hanwha Co., Ltd. will increase from the existing 9.70% to 17.1% (a total of 13,272,546 common shares).
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